Platts ... implementing quality premium for Murban
Platts may soon set premium for Murban crude in Mideast price benchmarks
SINGAPORE, March 24, 2016
Global oil pricing agency Platts may soon implement a quality premium for Murban crude deliveries during its daily assessment process of the Dubai and Oman benchmarks for Middle East oil.
The move could lead to the first deliveries of the Abu Dhabi flagship crude during the Platts Market on Close (MoC) process.
Platts added Murban, along with Qatar's Al-Shaheen grade, in January to the basket of crudes used to assess Dubai and Oman, just months after MoC liquidity was tested by high trade volumes between two Chinese state traders.
While six Al-Shaheen cargoes were delivered during January trades, however, the lack of a premium for Murban to make up for its higher quality compared with the other deliverable grades in the basket have deterred sellers from nominating the crude.
In a proposal, Platts said it is seeking feedback from the market on the implementation of a quality premium for Murban that buyers would pay to sellers if a cargo of the Abu Dhabi crude was sold during the MoC process.
"We have seen support for the (quality premium) concept grow and have continued to consult with the market on the right calculation methodology," Platts said in an e-mail.
Murban, which has a higher API gravity, is of a better quality than the other grades - Dubai, Oman, Upper Zakum and al-Shaheen - that Platts uses to assess the benchmarks that price more than 12 million barrels per day of Middle Eastern and Russian crude exported to Asia.
Under the proposal, the Murban quality premium would be 60 per cent of the net price difference between Platts front-month cash Murban assessment and Platts front-month cash Oman assessment during the full month prior to announcement.
There will be no premium if 60 per cent of the price difference comes to less than 25 cents a barrel, Platts said.
The premiums would be calculated using a single month's data and then announced two months before the loading period for the cargoes it would affect, the agency said.
Platts is also seeking feedback by April 11 on implementation timing, saying it has seen support for a quick start to use of the premium.
Platts, part of McGraw Hill Financial, competes with Thomson Reuters in providing information to energy markets.-- Reuters
